The Fed Believes Japan’s Great Deflation Myth
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Just as many contemporary Federal Reserve policymakers, including Ben Bernanke, have distilled false lessons from the history of the Great Boom and Bust in the USA of the interwar years and in applying these have caused much harm, so it has been with what they have learned from the much more recent Great Boom and Bust in Japan, starting in the mid-1980s and running into the ‘lost decade’ and beyond. Believing fully in the myth of Japan’s Great Deflation, they deduced from this a set of false lessons for the modern conduct of US monetary policy.
KeywordsMonetary Policy Asset Price Federal Reserve Equity Risk Taylor Rule
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